You should include the full amount of the 401(K) excess deferral, $2,800, as wages on your 2018 Form 1040.
On your 2019 Tax Return, you can include the $110 loss as a negative amount on Schedule 1, line 21 of your 2019 Form 1040. You can identify the loss as “Loss on Excess Deferral Distribution.”
To include your wife's overcontribution of $2,800 on your 2018 Tax Return, please follow these steps:
- Open your return
- Click on the "Federal Taxes" Tab
- Click on the "Wages & Income" Tab
- Click on "I'll choose what I work on"
- Scroll down to "Less Common Income" and click "Show More"
- Select "Miscellaneous Income" and click "Start or Update"
- Select "Other income not already reported on a Form W-2 or Form 1099" and click on "Start"
- Answer the Question "Did you receive any other wages? Yes"
- Click "Continue" through the questions until you get to "Any Other Earned Income"
- Answer "Yes" to "Did you earn any other wages?"
- Indicate "Other" as "Source" of Other Earned Income and click "Continue"
- For the description enter "2018 Excess 401K Deferrals" and click on "Done"
